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Gold gains as investors seek safety amid US-China tensions

· Gold rose on Monday as brewing tensions between the United Sates and China over the novel coronavirus outbreak kindled fears of a new trade war and had investors seeking safe havens.

· Spot gold gained 0.4% to $1,705.62 an ounce. U.S. gold futures settled 0.7% higher at $1,713.30.

· “There’s flight to safety because equities look weak as it is unknown how this is going to play out,” said Bob Haberkorn, senior market strategist at RJO Futures. “There probably are going to be a lot of issues coming up over the next couple of months with China, and rest of the world due to this virus.”

· Global stock markets fell on concerns U.S.-Chinese bickering over the origin of the outbreak will ignite a new trade war.

· Britain said on Monday that China has questions to answer over the information it shared about the outbreak.

· U.S. Secretary of State Mike Pompeo said on Sunday there was evidence the disease emerged from a Chinese lab, but did not dispute U.S. intelligence agencies’ conclusion that it was not man-made.

· “Given the relative stability of global COVID-19 cases worldwide and the gradual reopening of economies, gold needs a fresh impetus to rally higher,” OCBC Bank said in a note.

“Renewed U.S.-China trade hostilities may prove to be the catalyst, but if it does not materialise, we see it challenging for gold to rally from here.”

· Safe haven gold has risen 12% this year on the back of massive stimulus measures unleashed by global central banks to ease the economic hit from the pandemic.

· In the latest evidence of the economic toll, a report showed new orders for U.S.-made goods fell more than expected in March and could sink further.

· Easing concerns over global bullion supply chains being strained, which helped drive prices in New York and London further apart than they have been in decades, two of the world’s biggest gold refiners, Valcambi and Argor-Heraeus, said they were restoring full operations.

· Gold has ‘growing potential’ to break $1,800 an ounce, says UBS

Gold prices could “break the highs” seen earlier this year, after declining in March along with assets across the board, according to UBS Investment Bank’s Joni Teves.

“There is growing potential (for gold) to break $1,800 (per ounce) in my view,” Joni Teves, precious metal strategist at UBS Investment Bank, told CNBC’s “Squawk Box Asia” on Monday. In the near term, the firm has a target price for gold at $1,790 per ounce.

That comes as “investor interest continues to grow in this environment of uncertainty and negative real rates,” Teves said.

As of Monday afternoon Singapore time, the price of spot gold was around $1,698.61 per ounce, an almost 12% increase year to date.

Last week, the World Gold Council released its first-quarter 2020 demand trends report for the precious metal, where it highlighted that the global coronavirus outbreak was “the single biggest factor influencing gold demand.

· Elsewhere, auto-catalyst metal palladium dipped 2.5% to $1,851.76 per ounce, having earlier hit an over one-month low of $1,824.28.

The state of the automobile sector, which typically accounts for over 80% of world palladium demand, continues to undermine sentiment, INTL FCStone analyst Rhona O’Connell said in a note.

Global car sales have slumped due to measures to contain the pandemic.

· Platinum rose 0.1% to $760.62 and silver shed 1.1% to $14.77.

Reference: CNBC